Sunday, July 22, 2012

[I]f you're still operating under the assumption that the earth's petroleum--or at least the cheap stuff--is about to run out, you're not going to thrive in the new oil era. Technology is making it possible to find, produce, and refine oil so efficiently that its supply, at least for practical purposes, is basically unlimited.
&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp&nbsp--BusinessWeek, December 14, 1998

That was the industry's story right before a decade-long climb in oil prices that ended with an all-time high in 2008. Only the oil industry would now have the audacity once again to peddle a story that it has gotten wrong for more than a decade as if it were brand new. Enlisting the media and its army of paid consultants, the industry is once again telling the public that oil abundance is at hand. And, what is doubly audacious is that it is promoting this tale as oil prices hover at levels more than eight times the 1999 low. Clearly, the industry is counting on collective amnesia to shield it from ridicule.

The industry's purpose is transparent: To ensure that the world remains addicted to fossil fuels by convincing all of us that our energy sources--more than 80 percent of which are fossil fuels--don't need to change. It's a winning strategy even if the industry's premise is wrong since the oil companies still have huge inventories of fossil fuels underground that they want to sell at top prices. And, they are only going to get those top prices if government, businesses and households fail to convert to alternatives and thus remain hostage to fossil fuels.

In a stroke of public relations genius, the industry recently sent one of its own, Leonardo Maugeri, an Italian oil executive, to moonlight as a "research fellow" at Harvard. It's hard to imagine a more prestigious name to use to propagate the industry's consistently overly optimistic pronouncements about oil supplies--even though we are told in italic type at the bottom of Maugeri's policy brief that "[s]tatements and views expressed in this policy brief are solely those of the author and do not imply endorsement by Harvard University, the Harvard Kennedy School, or the Belfer Center for Science and International Affairs." Guess how many media outlets printed that disclaimer.

You can find Maugeri's report here. What you won't find there or in current media accounts are his consistently failed predictions about rising supply in the last decade, supply that was supposed to result in a flood of oil. Here's one gem from 2006 in a piece he authored for Forbes Magazine: "A plausible forecast is that by the end of the decade the daily demand for oil will have expanded by 7 to 8 million barrels. If global production continues at present rates, it could grow by 12 to 15 million barrels per day in that period. In other words, there is more than enough oil in the ground." Maugeri's contention was that high prices would result in a supply response that would bring back the good old days of abundance. Of course, no one covering his recent policy brief bothers to mention that his 2006 prediction turned out to be wrong, and not by just a little. World oil production has been flat since 2005. His vaunted supply response never materialized.

With oil still hovering above $100 a barrel in Europe, people find the stories of Maugeri and others comforting because they promise continuity. And, yet change is all around us in the oil markets and has been for more than a decade. Eventually, the volatility of those markets and the realities of constrained supply will demonstrate the truth of the matter to the public. By then, however, we may have lost another decade of preparation to the complacency created by a cleverly crafted abundance fantasy designed to lull policymakers and the public into a dreamlike trance of acquiescence.

Kurt Cobb is the author of the peak-oil-themed thriller, Prelude, and a columnist for the Paris-based science news site Scitizen. His work has also been featured on Energy Bulletin, The Oil Drum, 321energy, Common Dreams, Le Monde Diplomatique, EV World, and many other sites. He maintains a blog called Resource Insights.

3 comments:

terrymcneely
said...

no problem with the premise of the article; but some of the reasoning i find suspect:The industry's purpose is transparent: ", To ensure that the world remains addicted to fossil fuels by convincing all of us that our energy sources--more than 80 percent of which are fossil fuels--don't need to change. It's a winning strategy even if the industry's premise is wrong since the oil companies still have huge inventories of fossil fuels underground that they want to sell at top prices. And, they are only going to get those top prices if government, businesses and households fail to convert to alternatives and thus remain hostage to fossil fuels." Conversion will take decades, and will not lower oil prices in the meantime; in fact if they came clean, prices would jump immediately, prolonging and deepening the depression we are now in.

The web has become a useful propaganda tool for the "No peak oil" meme. More and more such articles under the bylines of obscure editors in small local online newspapers are written each month. These articles, almost universally innumerate, with no means of reader feedback, are coming out at the right frequency to maintain "brand awareness" AND to skew google search results.

It would almost be amusing to watch as "Free Market" capitalists and industry shills try to drown out the market signals that indicate that global production has peaked, were it not that so many people who make our decisions for us would rather listen to lies, than the truth in rising prices despite shrinking demand, smaller discoveries, and rapidly diminishing EREOI.

These are the "signals" that any smart capitalist, or anyone else who wants to be able to plan for a plausible future, would pay close attention to.

But our leaders, like the rest of us, can't handle the truth and are making decisions whose consequences will cascade and amplify down through decades and affect every human on the planet, on the quicksand of delusion.